Question

The point on the supply curve at which a firm earns only normal profit is called ..........

• A. Break-even point
• B. Average Profit
• C. Long Run Average Cost
• D. Fixed Cost

Hint:

Normal profit = Zero economic profit. Break-even point is where TR = TC.

Answer 1

The Correct Option is A

Step 1: Define normal profit.
Normal profit is achieved when total revenue equals total cost, inclusive of opportunity cost. In economic terms, this results in zero profit.
Step 2: Locate the relevant point.
This condition is met at the break-even point, where total revenue is equivalent to total cost.
Step 3: Discard irrelevant options.
- (B) Average profit: This does not represent the concept being discussed.
- (C) LRAC (Long-Run Average Cost): This is a curve, not a point indicating profit levels.
- (D) Fixed cost: This factor is not directly related to the condition for profit.
Final Answer: \[\boxed{\text{Break-even Point}}\]